CONTENTS

Chapter 1:
1. 2. 3. 4. 5.

Introduction to Company

Nature of Business Type & ownership Pattern Organizational Structure Production Lay out Organizational Policies

Chapter 2:
1. 2. 3. 4.

Industrial Analysis

5.

Industry Overview (Growth rate of Industry, Contribution to GDP) Current Issues (From Newspaper, Journals For Company and Industry) Key Competitors Environmental Scanning Political environment, Economic environment, SocioCultural Environment, technological environment, environmental issues (Green environment) and Legal environment. Porters five forces model of competition Michael Porter

Chapter 3:
1. 2. 3. 4. 5.

Marketing Strategies

Products of Company 4 Ps (Product: Price, Place & Promotion) STP (Segmentation, Targeting and Positioning) Distribution Channels Promotion Strategies

Chapter 4:

Financial Analysis

1. Sources of Finance 2. Ratio Analysis Any 5 3. Net Profit/ Balance sheet (from annual report) -Analyse

Chapter 5: Key Learnings from the Company and Recommendations

1. Performance Analysis of the Company 2. Reasons for the expansion/contraction/diversification of Company 3. Comment on Organizational Leadership

4. Market share/growth rate of Company 5. SWOT Analysis of the Company

Chapter 6: Chapter 7:

Findings Conclusions and Suggestion

CHAPTER=1 INTRODUCTION Nature of the business

Oil and Natural Gas Corporation Limited (ONGC)) is an Indian state-owned oil and gas company headquartered in New Delhi, India. It is one of the largest Asia-based oil and gas exploration and production companies, and produces around 77% of India's total crude oil production (and around 30% of total demand) and around 81% of natural gas production. ONGC is one of the largest publicly traded companies by market capitalization in India and the largest India-based company measured by profits. ONGC was founded on 14 August 1956 by the Indian state, which currently holds a 74.14% equity stake. It is involved in exploring for and exploiting hydrocarbons in 26 sedimentary basins of India, and owns and operates over 11,000 kilometers of pipelines in the country. In 2010, it was ranked 18th in the Platts Top 250 Global Energy Company Rankings and 413th in the Fortune Global 500.

History Foundation to 1961 During the pre-independence period, the Assam Oil Company in the northeastern and Attack Oil company in northwestern part of

the undivided India were the only oil companies producing oil in the country, with minimal exploration input. The major part of Indian sedimentary basins was deemed to be unfit for development of oil and gas resources. After independence, the national Government realized the importance oil and gas for rapid industrial development and its strategic role in defense. Consequently, while framing the Industrial Policy Statement of 1948, the development of petroleum industry in the country was considered to be of utmost necessity. Until 1955, private oil companies mainly carried out exploration of hydrocarbon resources of India. In Assam, the Assam Oil Company was producing oil at Digboi (discovered in 1889) and Oil India Ltd. (a 50% joint venture between Government of India and Burmah Oil Company) was engaged in developing two newly discovered large fields Naharkatiya and Moraan in Assam. In West Bengal, the Indo-Stanvac Petroleum project (a joint venture between Government of India and Standard Vacuum Oil Company of USA) was engaged in exploration work. The vast sedimentary tract in other parts of India and adjoining offshore remained largely unexplored. In 1955, Government of India decided to develop the oil and natural gas resources in the various regions of the country as part of the Public Sector development. With this objective, an Oil and Natural Gas Directorate was set up towards the end of 1955, as a subordinate office under the then Ministry of Natural Resources and Scientific Research. The department was constituted with a nucleus of geoscientists from the Geological survey of India.

A delegation under the leadership of Mr. K D Malviya, the-then Minister of Natural Resources, visited several European countries to study the status of oil industry in those countries and to facilitate the training of Indian professionals for exploring potential oil and gas reserves. Experts from Romania, the Soviet Union, the United States and West Germany subsequently visited India and helped the government with their expertise. Soviet experts later drew up a detailed plan for geological and geophysical surveys and drilling operations to be carried out in the 2nd Five Year Plan (1956-57 to 1960-61). In April 1956, the Government of India adopted the Industrial Policy Resolution, which placed mineral oil industry among the schedule 'A' industries, the future development of which was to be the sole and exclusive responsibility of the state. Soon, after the formation of the Oil and Natural Gas Directorate, it became apparent that it would not be possible for the Directorate with its limited financial and administrative powers as subordinate office of the Government, to function efficiently. So in August, 1956, the Directorate was raised to the status of a commission with enhanced powers, although it continued to be under the government. In October 1959, the Commission was converted into a statutory body by an act of the Indian Parliament, which enhanced powers of the commission further. The main functions of the Oil and Natural Gas Commission subject to the provisions of the Act, were "to plan, promote, organize and implement programmers for development of Petroleum Resources and the production and sale of petroleum and petroleum products produced by it, and to perform such other functions as the Central Government may, from time to

time, assign to it ". The act further outlined the activities and steps to be taken by ONGC in fulfilling its mandate. 1961 to 2000 Since its inception, ONGC has been instrumental in transforming the country's limited upstream sector into a large viable playing field, with its activities spread throughout India and significantly in overseas territories. In the inland areas, ONGC not only found new resources in Assam but also established new oil province in Cambay basin (Gujarat), while adding new petroliferous areas in the Assam-Arakan Fold Belt and East coast basins (both inland and offshore). ONGC went offshore in early 70's and discovered a giant oil field in the form of Bombay High, now known as Mumbai High. This discovery, along with subsequent discoveries of huge oil and gas fields in Western offshore changed the oil scenario of the country. Subsequently, over 5 billion tones of hydrocarbons, which were present in the country, were discovered. The most important contribution of ONGC, however, is its self-reliance and development of core competence in E&P activities at a globally competitive level. A turning point in the history of Indias oil sector was in 1994. While the oil sector was on the backburner of India's political realm for some time, was brought to the forefront by the privatization of India's leading oil E&P organization, the ONGC. Simultaneously, there were steps taken for the enhancement of production on the Bombay High oil fields as the result of an INR 150 billion development investment.

One of Asia's largest oil E&P companies, ONGC became a publicly held company as of February 1994, following the Indian government's decision to privatize. Eighty percent of ONGC assets were subsequently owned by the government, the other 20% were sold to the public. At this time, ONGC employed 48,000 people and had reserves and surpluses worth INR 104.34 billion, in addition to its intangible assets. The corporation's net worth of INR 107.77 billion was the largest of any Indian company. After its initial privatization, ONGC had authorized capital of INR 150 billion: it also met its need to raise INR 35 billion to invest in viable oil and gas projects. The Asian Development Bank (ADB) had also set a deadline for privatizing and restructuring at 30 June 1994, if loans were to be granted for development of two ONGC projects. As a consequence of the successful privatization, the loans were granted - US$267 million for development of Gandhar Field, and US$300 million for the gas flaring reduction project in the Bombay Basin. The successfully formulated and implemented privatization strategy put ONGC at par with other large multinational and domestic oil companies. 2000 to present In 2006 a commemorative Coin set was issued to mark the 50th anniversary of the founding of ONGC, making it only the second Indian company (alongside State Bank of India) to have such a coin issued in its honoure. In 2011, ONGC applied to purchase of 2000 acres of land at Dahanu to process offshore gas.

ONGC Videsh ONGC Videsh Limited (OVL) is the international arm of ONGC. It was rechristened on 15 June 1989. It currently has 14 oil and projects across 15 countries. Its oil and gas production reached 8.87 MMT of O+oEG in 2010, up from 0.252 MMT of O+OEG in 2002/03. TYPES AND OWNERSHIP PATTERN

SNO. 1 2 3 4 5 6 7 8 9 10

SHAREHOLDER President of india indian oil corporation ltd. LIC of india gas authority of india ltd. franklin templeton investment funds LIC of india market plus LIC of india money plus ICICI prudential life insruance company ltd LIC of india market plus-1 LIC of india-profit plus

% OF TOTAL SHARE HELD 74.14 7.69 3.06 2.4 0.93 0.48 0.48 0.43 0.39 0.37

ORANIZATIONAL STRUCTURE

PRODUCT LAYOUT

Year Months Product name 1103 12 1103 12 Oil Crude Gas Natural Aromatic Rich Naphtha

Sales quantity 22943996 20287778

Sales unit of measurement Metric Tonnes Thousands Cu Metres Metric Tonnes

Sales value(Rs. Crores) 46125.126 13075.48

Product Mix(%) 67.76 19.2

1103 12

1600399

5634.23

8.27

1103 12

Liquefied Petroleum 1057266 Gas C2/C3 (Ethane/Propane) 387086

Metric Tonnes

1836.849

2.69

1103 12 1103 12 1103 12 1103 12 1103 12 1103 12 1103 12 1103 12 1103 12 1103 12 1103 12

Metric Tonnes

879.578 155.641 89.537 87.132

1.29 0.22 0.13 0.12 0.09 0.07 0.06 0.01 0 0 0

Other Fiscal Benefits 0 Job Work Freight Superior Kerosene Oil Fuel Low Sulphur Stock HSD LDO/HSD Motor Spirit Others 0 0 118074 13504 16141 3268 53 625 0 Metric Tonnes Metric Tonnes Metric Tonnes Kilolitres Metric Tonnes Kilolitres

67.88 52.721 47.342 13.445 0.203 3.648 0.062

ORGNIZATIONAL POLICIES HEALTH, SAFETY AND ENVIRONMENT POLICIES OF ONGC

The HSE management system of ONGC is top driven efficient, effective and vibrant management system. Top management of company is committed for maintaining highest standard of Health Safety and Environment protection and is also committed to meet all applicable statutory requirement and prevention of pollution. This commitment is evident as HSE policy statement signed by CMD ONGC has a HSE Committee of Board, which comprises of members of Board from ONGC including representative from Ministry of Petroleum and Natural Gas. This committee is the apex body of HSE administration. The committee reviews policy, processes and systems on HSE and ecology aspects. ONGC has well structured HSE set up for managing HSE functions and issues of the organization. At Corporate level the HSE setup is headed Chief HSE reporting to Director Incharge HSE and at Asset/ Basin and Plant level by Head HSE reporting directly to Asset/ Basin Manager and Plant Head respectively. Greatest emphasis is given to safety measures for minimizing accidents. Accidents are investigated and analysed for root cause so that reoccurrence can be prevented. A comprehensive HSE manual has been developed for use by operating and HSE personnel. Specialized Personnel Protective Equipments have been standardized and provided to operating personnel for use in the work areas. Regulatory authorities and Govt. agencies carry out inspection/ audits with an aim for overall improvement in the HSE performance at regular frequency.

A dedicated HSE website has been developed for creating awareness among company employees as well as for serving an interactive platform for HSE personnel through dissemination of HSE related information and providing links for important websites. HSE management is accorded top priority in ONGC and Quality Occupational Health Safety and Environment Management System (QHSE MS) has been developed, implemented and certified at operating facility as per the requirements of ISO 9001, OHSAS 18001 and ISO 14001. To enhance credibility, the QHSE management system at operating facility is third party certified and subjected to annual surveillance audit. HSE issues are addressed systematically, effectively and proactively as per requirements of ISO standards/ OHSAS guidelines by making specific objectives and targets to address them. The system works on the principle of risk management / environmental aspects management by identifying, quantifying and addressing them through appropriate work instruction and management plan. ONGC HSE policy

We are committed to maintain highest standards of Occupational health, safety and environment protection. We shall comply with all applicable codes and requirements to promote occupational health, safety and environment protection. We shall be always alert, equipped and ready to respond to emergencies. We shall take all actions necessary to protect the integrity of the system in order to avoid accidental release of hazardous substances.

We shall enhance awareness and involvement in promotion of occupational health, safety and environment protection wherever we work and reside.

PRIVACY POLICIES OF ONGC

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GOVERNMENT POLICY
Market Determined Pricing Mechanism (MPDM) for most of the products w.e.f. April 1, 2002 except for LPG and Kerosene Refineries de-regulated w.e.f. April 1, 1998. The Oil Industry Pool Accounts dismantled w.e.f. April 1, 2002 Pipeline Transportation tariff decontrolled and based on commercial terms Private sector

entities allowed marketing rights for transportation fuels subject to such entities investing Rs. 20 billion.

CHAPTER=2 INDUSTRIAL ANALYSIS OVERVIEW

Born as a modest corporate entity within serene Himalayan settings on 14 th August 1956 as Commission, Oil and Natural Gas Corporation Limited

(ONGC), has grown into a full fledged horizontally integrated upstream petroleum company. Today, ONGC is a flagship public sector enterprise and Indias highest profit making corporate, which has achieved the landmark since inception, ONGC has produced more than 600 million metric tones of crude oil and supplied more than 200 billion cubic meters of gas, thus fuelling Indias economy.

ONGC is one of Asia's largest and most active companies involved in exploration and production of oil. It is involved in exploring for and exploiting hydrocarbons in 26 sedimentary basins of India. It produces about 30% of India's crude oil requirement. It owns and operates more than 11,000 kilometers of pipelines in India. The liberalized economic policy, adopted by the Government of India in July 1991, sought to deregulate and de-license the core sectors (including petroleum sector) with partial disinvestments of government equity in Public Sector Undertakings and other measures. As a consequence thereof, ONGC was re-organized as a limited Company under the Company's Act, 1956 in February 1994. In the year 2002-03, after taking over MRPL from the A V Birla Group, ONGC diversified into the downstream sector. ONGC will soon be entering into the retailing business. ONGC has also entered the global field through its subsidiary, ONGC Videsh Ltd. (OVL). ONGC has made major investments in Vietnam, Sakhalin and Sudan and earned its first hydrocarbon revenue from its investment in Vietnam.
GLOBAL RANKING ONGC ranks as the Numerous Uno Oil & Gas Exploration & Production (E&P) Company in Asia, as per Platts 250 Global Energy Companies List for the year 2007. ONGC ranks 23rd Leading Global Energy Major amongst the Top 250 Energy Majors of the World in the Platts List based on outstanding performance in respect of Assets, Revenues, Profits and Return on Invested Capital (RIOC) for the year 2007. ONGC is the only Company from India in the Fortune Magazines list of the Worlds Most Admired Companies 2007. ONGC is 9th position in the Industry of Mining, crude oil production. ONGC VISION

To be a world class Oil and Gas Company integrated in energy business with dominant Indian leadership and Global presence. ONGC MISSION Dedicated to excellence by leveraging competitive advantages in R&D and technology with involved people. Imbibe high standards of business ethics and organizational values. Abiding commitment to safety, health and environment to enrich quality of community life. F o s t e r a c u l t u r e o f T r u s t , o p e n n e s s a n d mu t u a l c o n c e r n t o ma k e a s t i mu l a t i n g a n d challenging experience for our people. Strive for customer delight through quality products and services.

CURRENT ISSUES

Bull's Eye: Short ONGC, Tata Motors, DLF; buy BOC India

CNB-TV18 brings you a brand new week of Bull's Eye. It's the popular game show where market experts come together to dish out trading strategies for you to make your week more exciting and compete with each other to see whose portfolio is the strongest. Remember these are midcap ideas not just for the day, but stocks that look attractive in the medium-term as well.

Government to analyses ONGC auction

before lining up more cost

With the ONGC disinvestment barely scraping through, Finance Minister Pranab Mukherjee today said the government has decided to study the auction process before going ahead with stake sale of other companies. "This (ONGC auction) is the first case. We shall have to to analyse and then make assessment," Mukherjee told reporters. The share sale of ONGC scraped through with largest insurer LIC coming to the rescue at the last moment.

LIC raises stake in ONGC to 9.5% after

State-owned Life Insurance Corp's (LIC) holding in state-run Oil and Natural Gas Corp has risen to 9.48% after a share sale auction in the company by the government last week. LIC has acquired 377.10 million shares, or 4.41% of the company, between Feb 8, 2011 and March 1, 2012, ONGC said in a statement to the stock exchange on Monday. The government, which offered a 5% stake in ONGC through a share auction on March 1, raised USD 2.57 billion after selling just 98.3% of the shares on offer. LIC took up more than half the offer, a banking source with direct knowledge said, while some media reports said the insurer had bought close to 90% of the shares.

Don't regret setting ONGC floor price at

premium: Government

Despite LIC's bailout, Siddharth Pradhan, additional secretary of the Department of Disinvestment tells CNBC-TV18 that they do not regret setting the ONGC auction floor price at a premium. "If we had given a discount, the government would have lost about Rs 2000 crore," he said. The government today received Rs 12766 crores from the ONGC auction in its account which will go towards fulfilling FY12's divestment target. In a filing to exchanges, ONGC said that over 88% of the shares on offer were bought by LIC. Pradhan goes on to say that they have not yet received any official indication as to what went wrong with the auction process. "We have heard that the goof up was done by the Stock Holding Corporation, but unless I get an authentic report, I can't go and take action against anybody,"

ONGC likely to trade in Rs 260- 300 range: Malkan

Malkan told CNBC-TV18, "ONGC still try to breakout above the range of Rs 300 but because of the negative news it has got back into the range and it would trade between the ranges of Rs 260300 for the next few weeks before the next trigger comes."

He further added, "I would like to buy Kotak Mahindra Bank which is outperforming the other banks and I would be interested in buying Kotak Bank around Rs 540-530 with a stop of Rs 510 for targets of Rs 625 and Rs 675 in the coming weeks out of all the banks."

Stocks in news: ONGC, MphasiS, HCL Info, Allcargo Global

ONGC Auction issue finally goes through (lot of drama & still no clarity on pricing) -LIC submitted bid for 40 crore shares via staggered price: Sources FM says -98.3% of ONGC auction subscribed -Rs 12,766 crore realized by government via ONGC share auction -ONGC receives 42.03 crore shares versus 42.77 crore shares on offer Govt sources says -ONGC share auction result 'disappointing' -Poor response to ONGC auction to impact divest plan -May not go in for Oil India share sale in such scenario Government says -Some bids were rejected for no fault of investors -Asked SEBI to investigate why bids were not uploaded -Exchanges still uploading ONGC share bids -Last minute rush for ONGC led to system overload -SEBI probing ONGC auction glitch -Not asked anybody to bail the issue out -Have not asked LIC or any government Financial Institution to subscribe -LIC decision to invest in ONGC shares purely its own -Oil minister was a party to 5% ONGC auction decision -Up to EGoM to decide on future divestment -Have short listed some cos for further disinvestment -NBCC IPO slated for this fiscal -Issue to be accepted if 75% of entire issue above floor price -Rs 40,000 crore divestment target is difficult thoughts yet on price hike post election outcome.

Value of LIC investment in ONGC dips by Rs 900cr in 2 days

Value of LIC investment in ONGC dips by Rs 9 State-owned insurance giant LIC, which saved the much-hyped ONGC share auction, has lost around Rs 900 crore in market value of the acquired stake in the oil major in just two trading sessions after the Offer for Sale (OFS) on Thursday. LIC, according to official sources, picked up 40 crore shares, or 95% of the state-owned ONGC shares on offer, sold through the auction route and witnessed substantial erosion in value of its investments thereafter. Taking into account the average price of Rs 303.67 per share, the acquisition of 40 crore shares of ONGC, or about 4.6% stake, through the auction route would have cost the LIC about Rs 12,146.80 crore. The value of investment at Saturday's closing price works out to be Rs 11,234 crore, reflecting a notional loss of about Rs 912 crore to the insurance major in just two days. Shares of ONGC closed at Rs 280.85 a piece, down 0.21% on the BSE yesterday. The government had earlier said it received an average price of Rs 303.67 for a share of ONGC, 4.71% higher than the floor price of Rs 290. "The volume weighted average price (of ONGC shares) was Rs 303.67 per share against floor price of Rs 290," the Finance Ministry had said a in statement. The stake sale yielded the government Rs 12,767 crore. As of October-December quarter of 2011-12, Life Insurance Corporation of India had stake of 3.23% in the ONGC. With the fresh equity, total holding of the insurer has gone up to about 8%.

It will still be less than the 10% investment cap fixed by insurance regulator IRDA. The first-ever auction of a state-owned blue chip got a very lukewarm response from the foreign financial institutions and domestic banks on March 1, and the issue would have flopped but for the LIC which picked up 95% of equity on the block.

KEY COMPETITORS

MAJOR PLAYERS Indian Oil corporation Reliance Industries NTPC Hindustan Petroleum Bharat Petroleum TCS Infosys Technologies Wipro SAIL

ONGC and Reliance major competitors for Indian blocks

ONGC and Reliance Industries are the major competitors for the 23 blocks being offered by the Indian government under the second bids of NELP, bidding for 17 and 15 blocks respectively. According to petroleum ministry officials, ONGC has bid for six deep water blocks -- two in Gujarat-Saurastra basin, two in Mumbai and two in Kerala-Konkan -- both on its own and with other state-run companies in the oil sector. ONGC and its partners bid for six shallow water blocks, in Gujarat-Sauratra, Mumbai and Cauvery basins. It also bid for five onshore blocks. Reliance Industries, in partnership with Hardy Oil, has placed bids for 15 blocks -- eight deep water, four shallow water and three onshore. The partnership is the sole bidder for two deep water blocks in Kerala-Konkan and a shallow offshore block in Sauratra,

according to the ministry.

ENVIRONMENTAL SCANNIG ECONOMIC ENVIRONMENT

In addition, analysts have noted that there are pricing cycle for crude oil, gas,refined margin and petrochemical margin that are out of phase

with each other, meaning that the organization would be particularly vulnerable to fluctuations in the prices if confined to operate in only one of these sectors. In this view, it would be desirable to diversify the companys operations and integrate several of the sectors to ensure financial stability and steady profitability

Economic sustainability for us means increased asset recovery, creating a secure

energy future for India and sharing wealth with our stakeholders."
A fundamental premise of our approach for working on the economic dimension of sustainability is: "Long-term profitability is essential to achieve our business goals, continued growth and sustenance. For our stakeholders, it is also a measure of efficiency and value. Economic sustainability at ONGC is envisaged through the following baseline strategic goals: Double Reserve Accretion from 6 to 12 BTOE (Billion Tonne Oil Equivalent) in 20 years. To improve Recovery Factor from 28% to 40% by 2020 To source 20 MMTPA (Million Metric Ton Per Annum) equity oil and gas in 20 years Globally, 2010 witnessed the second strongest year of oil demand growth in last 30 years. Notwithstanding the stagnant crude oil production in the country, the India story is one of rising consumption of petroleum products requiring increased crude oil Supplies. At the apex level, the economic approach of India's flagship oil and gas exploration and production company continues to remainguided broadly by the government policies, direction and the fundamental premise as stated above. However, the precisesteering of the economic approach has to be, and therefore is a function of theindustry dynamics including technology.The industry has been witnessing oil field depletion with most of the fields in the non-OPEC countries declining with diminishingfield size. Most of the new discoveries in the recent past have been comparably small with a large number of these discoveries inthe deepwater & ultra deepwater where technology & investment is a challenge. Our economic approach to sustainability in the reporting period therefore has been to arrest decline rates in matured oil fieldsthrough technologically- appropriate costintensive Improved Oil Recovery/Enhanced oil Recovery (IOR/EOR) schemes. Wehave made a cumulative investment of more than INR 365 billions since FY'01 towards these IOR / EOR schemes. A key metricof economic sustainability for an exploration and production company is the Reserve Replacement Ratio (RRR) and therecovery factor. Our RRR in the reporting period being 1.76 and the significant increase in recovery factor from 28% (2000) to33.5% (2011) robustly demonstrate our approach towards the goal of growth, sustenance and thus economic value for ourstakeholders. The industry is witnessing a change in the gas business with the shale gas revolution having the potential of being a "GameChanger. Seizing opportunity, scripting success in the Indian shale gas map, and increasing gas production since FY' 10 is partof our

approach for economic growth in the evoing industry.

ENVIRONMENTAL ISSUES

"Manage and reduce current impacts, improve understanding and management of material issues su

By definition, exploration and production of hydrocarbon is extractive in nature. Therefore, it involves close interaction withsurrounding environment. At the same time, oil & gas exploration and production, the core business of ONGC, isimperative forour nation's growth and energy security. We realize that environmental management is not just about mitigating the impact of ouroperations. It is also to address larger issues such as climate change, water and bio-diversity management, and procuringcleaner sources of energy. Improving our environmental performance is a continuous process and requires constant vigilance. Our approach to environment management is guided by principles of Manage, Reduce & Diversify. 1. Manage: Our activities impact land, water, biodiversity, local environment and climate change through wastes such asdrilling waste, effluents and emissions. The environment management system of ONGC is policy and system driven and it is steered at the Apex level by a Director of the Board. Our commitment to pollution prevention and protection of the environment finds action through plans and programmes driven by the following policies: Integrated HSE Policy Sustainable Water Management Policy Climate Change and Sustainable Development Policy Rain Water Harvesting Policy Greening the Vendor Chain Policy Risk Management Policy All the operating establishments in ONGC are ISO & OHSAS certified. To be able to have a comprehensive approach

towards HSE management, the Environment Management System based on ISO 14001 has been integrated with a Quality Management System based on ISO 9001 and Occupational Health and Safety Management System based on OHSAS 18001. The integrated management system known as QHSE management system has been sustained successfully since2005. 2. Reduce: During the process of exploration and production of crude oil & gas, we impact the immediate environment through the use of natural resources such as water and the extraction of oil & gas. To mitigate this impact, we strive to improve our resource utilization through operational efficiency, reduced wastage and recycling when feasible. We constantly look for adoption of technological innovations, industry best work practices, and our own R&D inputs to optimize resource utilization for our operations. 3. Diversify: Recognizing the imperative for gradual transition from conventional hydrocarbons to unconventional hydrocarbons, we are actively pursuing such untapped sources. We currently contribute almost half of the natural gas (considered as the bridge to decarbonization) production in the country, operate five Coal Bed Methane blocks and have made a successful foray in Underground Coal Gasification and Shale gas. All of these are less carbon intensive as compared to crude oil.nvironmental Management at ONGC 1.Diversifying Sources of Energy 2. Mitigating Climate Change

3. Managing Water & Waste 4. Stewarding Bio-Diversity 5. Improving Business Operations

SOCIAL PERFORMANCE

Spend on Corporate Social Responsibility as community investment of INR 2.2 billion G ONGC believes that sustainable growth for an organization, particularly for an extractive industry with multiple societal touch points, is strongly anchored around integrity, respecting the rights of all its stakeholders, and operational excellence through an engaged, inspired and knowledge-seeking workforce. Our commitment to the above belief finds voice in our mission to be a world class organization and finds action through policies, plans and work programs. The upstream oil & gas industry in India as it exists today, has largely been scripted by the large family of oilmen, fondly called as ONGCians. Continuing this hallowed tradition, it is our endeavour to create and sustain an enabling work environment that empowers our employees to attain the highest level of professional excellence and satisfaction. The quality of talent is a critical success factor for the upstream oil & gas industry. To ensure that we continuously attract and retain quality, scarce and niche talent as required for our success we offer them avenues for professional growth and enrichment in a motivating work environment. We continuously assess and analyze our human resource policies and practices, based on continuous feedback from the employees and the management. Our Director (HR), Member of the Board, is the senior most decision maker in all employment and HR

related matters. We practice high standards of business ethics and values and foster a culture of trust, openness and respect to make working a stimulating and challenging experience for our people. Safety of our employees and their security along with that of our assets is vital to us. We have globally recognized, robust and effective management systems, supplemented by adequate technical and administrative measures for a safe workplace. Community focus, responsibility for societal development and building a strong industrial base for the country are the foundational elements for all CPSEs. ONGC has been a pioneer in corporate social responsibility practices. Corporate Social Responsibility(CSR) at ONGC is a structured mechanism of engaging and benefiting the local communities in the areas where we operate. It aims to strengthen the fabric of society that we operte in. Through partners we identify the needs of the communities, and select and implement programs that address those

needs. Our CSR projects are targeted towards empowering the weakest sections of the society, such as children, women, and the elderly. Our programs generate employment

& business opportunities, improving the living standards of the community in turn improving the economy of the region. Apart from this, grants-in-aid are also provided that help in building schools and hospitals. Villages are adopted and health and community welfare programs are organized in the area around our activities. Our ChiefCorporate Social Responsibility is the senior most person responsible for community development projects. At the work-centre locations, the Head of Human Resources/Employee Relations (HR/ER) is responsible for CSR programs and is assisted by full-time CSR co-ordinators. At ONGC, product responsibility is approached holistically, to identify and minimize the environmental impact at our exploration and production facilities. The aim is also as to meet the customer needs in various market segments. We are committed to meeting the customers' expectations, anticipating their needs, and providing value added products. Customer health and safety are important aspects and their consideration is ensured by strict adherence to the rules and regulations related to petroleum products in India. In carrying out official functions, ONGC officials abide by laws pertaining to oil and gas exploration and production in India, particularly in regard tooperational and safety requirements.

POLITICAL ENVIRONMENT
In the light of declining crude oil and gas production coupled with a desire to grow, indias ONGC embrarked on a vast diversification scheme involving vertical integration into downstream activities, power, investment in foreign oil companies and the entering into the unrelated industries of shipping and insurance. Through deemed valuable and necessary opposition from indias govt. although the 90s were a decade of liberalization and govtal disinvestment in ONGC, the govt of india still held a 7f4.1% share of the company in april 2004. This means that ONGC will for a large par t be subject to the will of the govt when it comes to the carrying out of its diversification plans.

TECHNOLOGICAL ENVIRONMENT
A large part of the worlds petroleum reserves has traditionally been deemed economically unviable due to the relative inaccessibility of certain patches. Ever more advanced technology, however, makes it

possible to reach more and more oil that was previously too expensive to extract. This is important for ONGC, whose reliance of obsolete technology was the cause of static and seemingly declining production from oil wells during the late 90s. The obsoleteness of these technological also led to high costs for ONGC. Companies that stay at the cutting edge of technological development has a significant advantage over companies that dont, it is therefore important to stay with the development and continually implement new technologies as they become available.

LEGAL ENVIRONMENT
The deregulation of Indian oil industry that came into effect in 2002 was very beneficial to ONGC. Domestic oil companies could now make independent decisions regarding the pricing of petroleum products based on import parity and market forces. Analysts thought that deregulation would give Indian PSUs an advantage due to their relatively well-developed infrastructure and distribution network. As it turned out, ONGCs revenues did indeed go up shortly after the new legislation came into effect: net sales went up by 53.4% from the fiscal year 2001-02 to fiscal year 2002-03.

PORTERS FIVE MODEL OF COMPETITION

PORTERS 5 FORCE MODEL Threat of new entrants Due mostly to the industry that ONGC is in, its hard for there to be many new entrants. The only real threat that might arise would be another government funded Oil and Gas company. The reason for this is that a government would not have as hard a time raising funds and gaining access to resources. This is assuming that the company would be researching and developing on domestic soil. The only other threat may not be from new entrants but from smaller competitors who already

have access to resources and distribution channels. There is really not much of a threat because there are two main barriers to entry that would be stopping potential threats. These would be very high capital requirements as well as access. Cost disadvantages independent of scale= Even though this industry if very attractive because of the high profits it would be very hard for a company to have enough capital to get in the market. Every part of Oil and Gas Exploration and Development is costly and not something that would be worth the costs as a new entrant into the industry. Going along with the high cost of capital are the cost disadvantages. The companies already in the industry already have the access to raw materials as well as desirable locations. This is something that would be very difficult for a new entrant to try and gain. Bargaining Power of Suppliers= ONGC is a vertically integrated company that really deals in all areas from finding the product to refining the product to selling the product. With this being said there is not much to worry about the bargaining power of the suppliers. Supplier power is high as the net margins are strongly dependent on the price of the crude. Due to crude price volatility and supply risks, a lot of the Indian companies are integrating backwards into E&P activities. Bargaining Power of Buyers= Not too critical for most companies as refining operations are a part of the complete supply chain, with the refining operations supplying the product to the marketing company. However in case of standalone companies (which may no longer apply) long term contracts have to be signed with the marketing companies. The margins in such cases are dependent on such long term contracts. The industry that ONGC is a part of is different than many other industries. It is different in the fact that people really cannot go without their product. While over a long period of time it may be possible to find other fuels it is not really feasible in the short term. This has been seen in the US in the last few years. Gas companies can keep the prices high and consumers will still pay the high prices. When looking at the individual buyer they have almost no bargaining power because they are only buying such an extremely small portion of the industries total output. Another reason for this lack of bargaining power is that as of right now there is not a real alternative to Oil. All of these reasons make it very hard for the buyer to have much bargaining power at all. Threat of Substitutable Products= Although gas, solar power etc exist as substitutes, none of them are big enough to impact the demand of the petroleum products. As stated above there is not a real alternative to oil at this time. There is research being

done to try and find substitutes. With the price of oil as high as it is at this time, it is only giving more reason to try and find other fuel sources. This is where the main players in this market must be careful. The prices are staying fairly high now because people really dont have a choice and must pay. If other fuels sources do come out that are less costly, many people will go towards those alternatives. It does not seem that at this time there is a huge threat of this happening but it is definitely a possibility that any player in the market must be aware of. Intensity of Rivalry among Competitors= The rivalry in the industry was low till as the industry was tightly regulated by the government. However, the level competition has increased with Reliance and other MNC becoming more aggressive. The largest competitors in this industry for ONGC are Exxon Mobile and Royal Dutch Shell. ONGC is currently in 14 different companies whereas Exxon Mobile is in 20 different countries. While Exxon may be a larger company now ONGC is growing and is becoming a very important global player

CHAPTER=3 MARKETING STRATEGIES PRODUCTS Oil crude Gas natural Aromatic Rich Naphtha Liquefied Petroleum Gas

C2/C3 (Ethane/Propane) Other Fiscal Benefits Job Work Freight Superior Kerosene Oil Fuels Low Sulphur Stock HSD LDO/HSD Motor Spirit others

STRATEGY In order to grow, there are a number of paths ONGC could potentially follow. For one, it could go with the governments wishes and merge with HPCL and BPCL. Alternatively, OVL could invest in the equity of these two companies to acquire a stronger share of Indias retail market. ONGC could also fight any affiliation with these companies. If deemed desirable, ONGC could se;; out of its foreign equity and rid itself of MRPL to concentrate solely on its traditional core business of E&R. Alternatively; ONGC could keep investing globally where could keep investing globally where opportunities emerge in

order to increase its global presence. From my analysis I draw the conclusion that the following strategies would be favorable: 1. Acquire HPCL and BPCL, or purchase equity in these companies. ONGC would gain a foothold in Indias marketing & retail market along with the experience that these companies possess in their fields. 2. Invest more globally The global environment will always hold growth opportunities. ONGC should expand on its current presence and keep investing where it seems viable. This would also serve to protect the company against failing domestic reserves. 3. Keep exploring Exploration has historically been ONGCs main strength. The company should capitalize on its experience and resources in terms of infrastructure and licenses in order to keep ahead of its competitors in India and in order to be competitive globally. 4. Diversify Downstream The MRPL division makes the company at large competitive in the market for refined petroleum products. ONGC should capitalize in this, seeing as how it would not then be subject to the price fluctuations of crude oil only. This is to insure stability. 5. Expand own operations in other countries. This would allow the company to capitalize on its experience and knowledge of technology in a more direct way than investment in other

countries. This is another way the company could protect itself from diminishing output from domestic wells. 6. Dont venture into insurance The company announced plans to venture into insurance, but seeing as how Indias insurance market is highly competitive as it is, and how insurance doesnt relate to ONGCs core competencies, I would advice against going into insurance.

4ps OF ONGC

STP (SEGEMENTATION, TARGETING AND POSITIONING) SEGEMENTATION

Corporates, countries, individuals looking to fulfill energy needs

TAGETATING
Enterprises looking for energy for production, people for petrol diesel for vehicles and domestic uses.

POSITIONING
The future of India's energy.

CHAPTER=4 FINANCIAL ANALYSIS RATIO ANALYSIS 1. Reserve Replacement Ratio RRR= Amount of proved reserve added this year Amount of oil & gas produced this year (RRR>1)
2006 2007 2008 2009 2010 1.1 1.35 1.32 1.44 1.74

2. Recovery factor
2006 2007 2008 2009 2010

24%

28%

26%

31%

33%

3. Current ratio
2006 2007 2008 2009 2010 1.42 1.4 1.56 1.45 1.39

4. Quick ratio
2006 2007 2008 2009 2010 1.28 1.28 1.39 1.27 1.22

5. Debt equity ratio

2006 2007 2008 2009 2010 0.24 0.24 0.18 0.2 0.19

6. Operating profit margin

2006 2007 2008 2009 2010 56.20% 49.50% 49.50% 50.40% 62.60%

7. Dividend per share

2006 2007 2008 2009 2010 45 31 32 32 33

8. PE ratio
2007 2006 2008 2009 2010 3.96 3.74 4.23 4.88 5.2

9. Earning per share

2006 2007 2008 2009 2010 101.2 73.14 78.09 75.4 78.39

10. Dividend pay out ratio

2006 2007 2008 2009 2010 0.44 0.42 0.41 0.42 0.42

BALANCE SHEET Rs in crores

Mar '11 12 mths
Sources Of Funds

Mar '10 12 mths

Mar '09 12 mths

Mar '08 12 mths

Total Share Capital Equity Share Capital Share Application Money Preference Share Capital

4,277.76 4,277.76 0.00 0.00

2,138.89 2,138.89 0.00 0.00

2,138.89 2,138.89 0.00 0.00

2,138.89 2,138.89 0.00 0.00

Reserves Revaluation Reserves

93,226.67 0.00 97,504.43 0.00 17,564.26 17,564.26 115,068.69 Mar '11 12 mths

85,143.72 0.00 87,282.61 0.00 16,405.64 16,405.64 103,688.25 Mar '10 12 mths

76,596.53 0.00 78,735.42 0.00 16,035.70 16,035.70 94,771.12 Mar '09 12 mths

68,478.51 0.00 70,617.40 0.00 12,482.71 12,482.71 83,100.11 Mar '08 12 mths

Networth
Secured Loans Unsecured Loans

Total Debt Total Liabilities

Application Of Funds
Gross Block Less: Accum. Depreciation 80,938.60 62,299.05 18,639.55 65,354.44 5,332.84 4,118.98 3,845.90 356.55 8,321.43 64,693.91 22,090.00 95,105.34 0.00 71,553.78 55,905.28 15,648.50 56,073.25 5,772.03 4,678.57 3,058.64 282.85 8,020.06 63,721.90 17,948.18 89,690.14 0.00 61,355.61 50,941.23 10,414.38 52,923.19 5,090.32 4,060.67 4,083.80 161.48 8,305.95 55,964.02 18,934.74 83,204.71 0.00 57,463.78 46,945.77 10,518.01 41,154.63 5,899.50 3,480.64 4,360.37 269.22 8,110.23 38,906.53 22,148.43 69,165.19 0.00

Net Block
Capital Work in Progress

Investments
Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit

Current Liabilities Provisions Total CL & Provisions

35,384.31 34,775.19 70,159.50 24,945.84 796.03 115,068.70 38,979.63 113.97

27,244.53 37,092.46 64,336.99 25,353.15 841.32 103,688.25 39,178.54 408.08

26,854.11 30,657.98 57,512.09 25,692.62 650.61 94,771.12 36,024.57 368.12

22,482.94 21,828.17 44,311.11 24,854.08 673.90 83,100.12 26,006.73 330.16

Net Current Assets

Miscellaneous Expenses

Total Assets
Contingent Liabilities Book Value (Rs)

CHAPTER=5 KEY LEARINGS FROM THE COMPANY AND RECOMMENDATIONS PERFORMANCE ANALYSIS
When a government-run entity prides itself on being a Rs.2.75 lakh crore entity in terms of Mcap, you wonder, is the government machinery working alight? with ONGC videsh ltd. And ONGC Mittle Energy ltd. promising an even brighter tomorrow, this PSU deserves honoure for its consistent performance. As an explorer and primary producer, ONGC controls the raw material i.e. crude, while HPCL, BPCL et al are all dependent on crude oil. The learning curve effect is the greatest advantage for ONGC and it has helped it reduce its project execution has further increased its efficiency. Despite the fact that as an upstream company it has to share the burden of33% oil subsidy its performance is praiseworthy.

Retaining talent at the mid-level has been a problem through; all thanks to its PSU status. It has a huge cash reserve too. The company can very well take advantage of the heightened crude prices, the only hindrance being the administered price mechanism. Despite government apathy, the company continues to perform well and will surely be more successful in future.

REASON FOR EXPANSION/ DIVERSIFICATION/ CONTRACT OF THE COMPANY

ONGC - Diversification and Integration in Business The fundamental role of diversification is to create value for stockholders. Diversification has three forms like Vertical integration, Horizontal diversification and Geographical diversification etc. In the last five decades ONGC India has diversified in all three forms of diversifications. Few examples are ONGC Videsh Limited (OVL), Deepwater Drilling, Coalbed Methane (CBM), Underground Coal Gasification (UCG), ONGC TERI Biotech Ltd. (OTBL), OTPC (Power), ONGC Petro Additions Ltd. (OPAL), Mangalore Refinery and Petrochemicals Ltd. (MRPL), Pipeline & Marketing and R&D in alternate Energy sources etc. When a company diversifies from a core business to a relative new business undoubtedly there is risk, but a leader has to identify the opportunity and risk in all movement. Diversification is the necessity of survival & growth and a leader has to understand the dynamics of business environment. The objective of the seminar was to discuss the role of a leader when organization has opportunities to diversify.

Reason for Expansion ONGC business

Licensing Policy Demand of Crude Oil Oil Prices Competition Burden Dependency

Licensing Policy:- by this private sector can also Participate in the exploration and production. Demand of crude oil:- demand was increasing day By day

:-

Oil Prices: - The trend of international prices was volatile and rising. Competition: - Domestic competition was increasing. Burden: - Increasing burden on the country due to the rising oil import bill Dependency:- The bottom-line was crude oil prices.

SWOT ANALYSIS

STRENGTHS
ONGC is the only company in India who is involved in offshore construction activities related to oil and gas project for more than two decades. The company has an established network in India. The company has gained expertise in the field of onshore and offshore oil exploration. It has rich experiences over the last 25 years in its execution and possesses abundant data associated with this project. ONGC is one of the few companies in the world, which owns and operates a large number of oil field services such as drilling, production testing, geophysical and logistic services. The organization possesses highly skilled manpower at a low cost. ONGC contributes 90% of Indian crude oil production. The operational cost of ONGC is lowest in the world and its reserve level is equivalent to 23 years of production. ONGC can boost of installing 28 processor platforms, 132well platforms and more than 4000 km submarine pipelines. Another area of strength of ONGC is its commitment and quality of maintenance management.

WEAKNESS
The purchase procedure of ONGC does not lead to Feasible and past purchase decisions. It is highly regulated by the government therefore the functioning of the organization, as a commercial organization is restricted or constraint. Behaviors of the certain reservoir in Mumbai had not been inline with the expectations, which would enroll investment in the future. There has been no major discovery in the past there is lower realization per barrel as compared to international prices. The companys earnings were insulated from the vagaries of

global crude oil prices. This will be a weakness for the company when the government decontrols the oil sector.

OPPORTUNITIES
The company has entered into strategic alliance with IOC to form a national oil entity for domestic and global operation. ONGC has been receiving adjusted pries for crude oil and once the government removes the APM, the earning is expected to increase. ONGC has an opportunity for growth in overseas market Through the subsidiary ONGC VIDESH LTD (OVL).Energy utilized of buried coal resources (7001700M), estimates 63BT-Equivalent to 15000 BCM.

THREATS
Security of personal and property especially crude oil continues to be a cause of concern in certain area. In some areas exploration Campaign Company involves high technology, high investment and high risk. ONGC has a lot of exposure to the group companies in the form of cross holding.

FINDING

CONCULSION AND SUGGESTION

BIBLOGRAPHY
BOOK REFERRED 1. M.Y. Khan and P.K.Jain, Financial Management, Himalaya Publication 2. Dr.P.C.Tulcian, Financial Management, S.Chand 3. Preeti Singh, Investment Management, HimalayaPublication 4. V.A.Avdhani, Security Analysis, HimalayaPublication MAGAZINE CAPITAL MARKET NEWSPAPERS BUSINESS LINE THE ECONOMIC TIMES WEB SITES

WWW.ongcindia.com